Mark Twain famously lived, and wrote for the newspaper in, Virginia City, at the time known as the “richest place on earth.” It is but a tiny tourist destination these days, an out of the way place to see on the way to or from Lake Tahoe.
In his new book “How Not To Get Rich: The Financial Misfortunes of Mark Twain” author Alan Pell Crawford quotes Virginia City historian Warren Hinckle, who wrote, “So fabulous were the fortunes produced and the manner of spending and squandering so superlative, that it burns through the fog of historical memory as a Cinderella city, a real-life, uniquely American Camelot devoted to the questionable art of conspicuous consumption.”
Twain was working for wages, but “whatever he wrote about the mines could, and did, affect their value,” Crawford writes. “Speculators routinely gave Twain presents of shares in their mines, and he found that he could sell these shares and live comfortably off the profits, which he did.”
And thus, the business of investment newsletter writing was born. What The Daily Racing Form is to horseplayers, investment newsletters are to degenerate gamblers who speculate in natural resource penny shares. I myself, look at two or three of these mining share tout sheets. It gave me pause when I read this in Crawford’s book. “He [Twain] learned the value of promoting a product, especially when it is worthless, and how to do so persuasively, with cunning.”
A letter writer, and investment expert, I follow, wrote the following recently, about various companies and/or their projects.
“located squarely on the mighty Carlin Trend of central Nevada.”
“I foresee a strong resource coming out of the company’s mineral package.”
“Clearly, they’re drilling in the right places and confirming the structural model of gold emplacement.”
“We’re looking at superb ore here. It’s a true moneymaker. And this is just the opening phase of an aggressive program to expand the known resource and “explore” further out from the existing known limits of mineralization.”
Twain used the same tactics over 100 years ago. “Consequently, we generally said a word or two to the effect that the ‘indications’ were good, or that the ledge was ‘six feet wide,’ or that the rock ‘resembled the Comstock’ (and so it it did–but as a general thing the resemblance was not startling enough to knock you down). If the rock was modestly promising, we followed the custom of the country, using strong adjectives and frothed at the mouth as if a very marvel in silver discoveries had transpired. If the mine was a ‘developed’ one, and had no pay ore to show (and of course it hadn’t), we praised the tunnel, said it was one of the most infatuating tunnels in the land; driveled and driveled about the tunnel till we ran entirely out of ecstasies–but never said a word about the rock.”
There are some mineral speculation pushers who go on and on about the management and ownership of a mining company: As if Secretariat was a good bet because Ronnie Turcotte was in the saddle and Penny Chenery was the owner.
Twain would “close with a burst of admiration of the ‘gentlemanly and efficient superintendent’ of the mine–but never utter a whisper about the rock.”
Mine owners just wanted to see some kind of news in the paper. “Occasionally,” wrote Twain, “we patched up and varnished our reputation for discrimination and stern, undeviating accuracy, by giving some abandoned claim a blast that ought to have made its dry bones rattle–and then somebody would seize it and sell it on the fleeting notoriety thus conferred upon it.”
In 1862, there was mining fever, and “washerwomen and servant girls” were trying to get rich in mining shares.
Twain had so many shares of high-flying stock, he quit the paper and moved to San Francisco. He lived like “a man worth a hundred thousand dollars (prospectively), and likely to reach absolute affluence.”
Crawford writes that the market value of the Comstock mines fell from $40 million to $4 million by the end of 1864. “The bubble scarcely left a microscopic moisture behind it,” Twain wrote. “I was an early beggar and a thorough one. My hoarded stocks were not worth the paper they were printed on. I threw them all away. I, the cheerful idiot that had been squandering money like water, and thought myself beyond the reach of misfortune, had not now fifty dollars when I gathered together my various debts and paid them.”
Bitcoin, bonds and FAANG shares are today’s bubbles, while mining shares remain in a funk. However, when Jerome Powell takes over the printing press from Ms. Yellen next year, perhaps he’ll finally lift the resource share boats as well, and analysis (of rocks) like this from Joe Mazumdar, “delineated several porphyry copper-gold targets within the property (Porvenir, Villa Rica, Los Baños, and Norte) based on anomalous copper and gold-in-soil anomalies delineated on an extensive soil grid and mapped outcrops of porphyry style alteration associated with magnetic highs and elevated chargeability,” will excite investors like it’s 1862 again.